A strange concession

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As any journalist can tell you, nothing promotes clarity of thought and purpose like a looming deadline.

So it wasn’t a shock when Governor Deval Patrick and Attorney General Martha Coakley finally reached a deal this week with NStar, offering state backing for the big utility to merge with Northeast Utilities in return for concessions to customers and commitments to buy power generated by Cape Wind, the controversial offshore wind project that has yet to be constructed in Nantucket Sound.

The business agreement between NStar and Northeast, struck in October 2010, was set to expire in less than nine weeks if the merger remained unconsummated. NStar executives had their deal on the line, and state officials risked losing their temporary leverage over the utility.

The headlines focused on NStar’s commitment to purchase 27 percent of the expensive power to be generated by Cape Wind - something the utility had been loath to do. Less noticed was another concession NStar made: that it would not use any hydropower to meet state-mandated renewable energy targets for the next five years.

That was a strange sort of concession, because hydropower already doesn’t count as a qualified renewable energy source under current state requirements. So what was the point of NStar’s hydropower concession? I didn’t get a good answer yesterday from anyone involved.

The NStar pledge is a reference to Hydro-Quebec, a huge source of electricity that doesn’t burn fossil fuel but creates other kinds of environmental problems. And it just so happens that NStar and Northeast Utilities are building a $1.1 billion transmission line that would bring relatively inexpensive hydropower from Canada to our region.

Many business leaders balk at the high price of renewable energy sources favored by current state law and embrace hydropower as a cost-effective way to achieve an environmental goal.

Hydropower doesn’t count as a qualified renewable energy source.

Consider what it costs to buy power today. The overall price of electricity fluctuates but runs at about 8 cents per kilowatt hour. Most qualifying renewable energy sources cost 10 to 15 cents, and Cape Wind power is expected to cost about 18 cents. Hydropower costs about a nickel per kilowatt hour.

Those business leaders have been lobbying on Beacon Hill in terms all legislators can understand: jobs. The Massachusetts Competitive Partnership, an organization created by leaders of many of the state’s largest companies, argues that the current renewable energy law costs jobs because it drives up the price of power for businesses. The group wants utilities to be able to use hydropower to meet renewable goals, but agrees it should not qualify for state subsidies intended to boost developing technologies.

“It’s green, it’s renewable, and it [reduces] carbon’’ emissions, says Dan O’Connell, president of Massachusetts Competitive Partnership. “Let it be part of the mix without any subsidies.’’

But NStar - the utility building transmission lines to deliver that power - just signed an agreement that effectively disavows that point of view. Did I mention that NStar chief executive Tom May sits on the board of the Massachusetts Competitive Partnership?

NStar officials say they have never really supported the idea of using hydropower as a source of qualifying renewable power. They say hydro’s real appeal lies in an ample supply of power at attractive prices that can affect the overall price of electricity.

I’m not the only one who takes that with a grain of salt. “I think it is a shift,’’ says Richard Sullivan, secretary of Energy and Environmental Affairs. “It really does show there is an across-the-board embrace by utilities of the clean-energy agenda in Massachusetts.’’

State officials and others point to several reasons why it would be a bad idea to count hydropower as a source of power that qualifies as renewable energy. They say that such a designation could increase the price of hydropower and hinder the long-term development of other forms of renewable energy.

Other critics even think Hydro-Quebec’s environmental benefits are being oversold. A new study commissioned by the Conservation Law Foundation says large-scale Canadian hydropower will produce “substantial greenhouse gas emissions that are comparable to those of modern natural gas-fired power plants.’’

Customers in Massachusetts will surely buy plenty of hydropower from Canada in the future. But don’t call it renewable energy.

Steven Syre is a Globe columnist. He can be reached at syre@globe.com.

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